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Integrated Delivery Systems In Managed Care

State Oversight Issues Wrap-up


Debra J. Lipson, Alpha Center.

Janet D. Olszewski, Division of Managed Care and Health Facility Development, Michigan Department of Community Health.

Using a case study approach, Ms. Lipson presented a hypothetical problem facing a generic State in regulating integrated delivery systems (IDSs). Participants broke out into small groups to devise solutions to the following set of questions:

  • What level of risk should trigger State licensing of IDSs?
  • How should States assure that patient rights are protected within IDSs: through health plan requirements or an independent process?
  • Should quality of care be assessed for the system as a whole or for the facilities and practitioners that make up the IDS?
  • What are the implications of IDS for State occupational licensure laws?
  • Under what conditions should States structure incentives or provide direct financial support for the development of IDSs?

Following the small groups, participants shared their findings. The following issues/concerns were highlighted:


  • Most participants seemed to think that IDSs should have to get licensed, regardless of the type of business they seek (i.e., Medicaid, commercial).
  • The groups made a distinction between IDSs that contract directly with employers and those that operate downstream of a licensed entity. They questioned whether licensing would be needed for provider service networks (PSNs) that take downstream risk only. They also felt the same for PSNs who operate on a fee-for-service (FFS) or discounted-FFS basis with a withhold.
  • In general, participants felt that States should offer some encouragement for the development of IDSs but question the need for antitrust protections or special considerations for Medicaid contracting.


  • Participants believed that States have a responsibility to establish explicit quality standards for licensed organizations but were reluctant to cede this responsibility fully to private accreditation organizations. However, performance as measured by private accreditation bodies could be used by States in determining compliance with State standards.
  • Appropriate information about quality measures should be made available to allow consumers to make judgment on what they are getting.

Patient Rights

  • The consensus was that where IDSs are similar to health maintenance organizations (HMOs), an internal grievance process needs to be in place and communicated to the consumer.

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